This is my last Economics & Investing column post for calendar year 2019, so today I’m posting my 2020 recommendations:
Stocks:
Minimize. The unprecedented 11+ year U.S. economic expansion cannot continue indefinitely. So far, the banksters have kept “the everything bubble” expanding by means of artificially low interest rates. At some point in the near future, the bubble will deflate, and possibly pop spectacularly. Keep in mind that 2020 is a presidential election year. If The Powers That Be (TPTB) want to see President DJT ousted, then they can do so with an orchestrated crash. If they merely allow interest rates to revert to more normal levels, then that would probably be enough to accomplish that. All in all, 2020 is a good year to get out of all but a few very safe “Widows and Orphans” stocks. And even with those, you should set Stop Loss orders. Precious metals mining stocks look like they will continue to be poor performers in 2020. Presently, buying a mining stock in not a good way to invest in precious metals.
Precious Metals:
Hold. This may be a good opportunity to re-balance your personally-held portfolio, but it is certainly not a time to reduce it! Your mileage may vary, but here is how I’ve allocated my personal metals portfolio for 2020:
- Silver: 80% (Mostly a mix of pre-1965 dimes and quarters, as well as some 1 ounce U.S. Mint Silver Eagles, and just a few serialized Engelhard 10 ounce bars.)
- Gold: 10% (I now have far more 1-ounce U.S. Mint Gold Eagles than I do numismatics.)
- Platinum: 10% (U.S. Mint Platinum Liberty 1/4-ounce and 1/2-ounce bullion coins)
Base Metals
Hold. I trust that you have all long since bought some boxes of nickels, at face value. Hang on to them. I also suggest closely watching the world supplies of cobalt, copper, lithium, and nickel. These are all key components of large batteries used for electric vehicles. If shortages of any of these loom up, then it would be a good time to invest in a few very carefully selected mining stocks. And, of these, nickel is compact enough to invest in, tangibly.
Bank Deposits:
Diversify. 2020 is again a year for caution with banks.The Deutsche Bank fiasco has yet to reach full fruition. And it is indicative that some very poor decisions were made by some of the world’s biggest banks. If you have more than $5,000 on deposit, then you should have it in at least two banks. Better yet, a bank and one or more credit unions.
My current favorite for diversification? Charles Schwab now offers no-fee interest earning checking accounts with no minimum balance, free checks, and all ATM fees fully rebated–worldwide. They call it their High Yield Investor Checking Account. (Note: I have no financial interest in Charles Schwab, and I haven’t been compensated for this recommendation. It was a friend who is an inveterate traveler who alerted me to the availability of these Charles Schwab accounts.)
Cash/Currencies:
Diversify and be ready for a banking crisis. If possible, keep enough cash at home (preferably in $20 bills) to be able to pay all of your bills for at least two months. Whether or not you do any international travel, you should also consider buying some Swiss Francs and British Pounds.
Cryptos:
Minimize. I expect the announcement of new sovereign (government-managed) cryptocurrencies, in the next few years. So, in one nation after another, private cryptos will become closely scrutinized and either banned or heavily taxed. Sell at the peaks.
Tangibles:
Increase. 2020 is a good year to increase your holdings of compact investment barterables, especially firearms and tools of your trade. If a Democrat takes the White House in the November 2020 election, then there is a high probability that private party sales of modern (post-1898) guns will be banned. (The so-called “Universal Background Checks”.) But pre-1899 will almost surely continue to be exempt, and hence the last bastion of gun buying privacy.
Collectibles:
Minimize. With the exception of guns, the nascent recession will be a poor time to have very much invested in collectibles. So minimize your holdings of fine art, rare wines, stamps, classic cars, Swiss watches, or other collectibles.
Land:
Sell your rentals. The real estate market is already showing signs of weakness. This is a good time to reduce your holdings of rental properties. But you should hold on to rural farm property that can double as a retreat. If you are liquidating land, rental houses, and any other assets, then this a good juncture to pay down (or pay off) the mortgage on your personal residence. Do your best to make yourself debt free. With a recession looming and layoffs possible, being debt-free is important!
Vehicles:
Get practical. Fancy, impractical cars don’t gain value in a recession. So this is a good time to trade into the most practical and well-maintained used cars and trucks that you can find. Ideally, you should have both one big and very sturdy 4-Wheel Drive pickup, and one small very economical runabout. To reduce the risk of a car-jacking buy cars that are at least five years old.
You
Improve. Your body and mind are your two assets that can’t be taxed, seized, or garnished — at least not by the whim of some bureaucrat, in the present day. So get fit, with regular exercise. Lose weight. Floss your teeth and gums daily. Buy two spare pairs of glasses. And don’t be afraid of the expense to study for a second profession (or trade) that will help make you recession proof, or even depression proof. – JWR